The pretax profit margin is the ratio of a company's pre-tax earnings to its total sales. The higher the pretax profit margin, the more profitable the company. The trend of the pretax profit margin is as significant as the figure itself. It indicates the direction of the company's profitability. The ratio can be calculated by dividing the earning before tax by sales revenues in the accounting period. It is expressed as a percentage, the higher pre-tax profit margin indicates a more profitable company.
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